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You’re the Doorkeeper, Not the Master of Ceremonies!

On Behalf of | Jun 24, 2013 | Firm News

The Facts:  Academy, Ltd. and Academy Management Co, L.L.C. (collectively, “Academy”) established an executive compensation plan in 2007. Donna Miller’s husband was part of that plan. After his death, she sought $2.4 million under the plan.

Academy invoked the plan’s arbitration provision and the trial court compelled arbitration. Mrs. Miller then asked the trial court to order that the case did not have to be arbitrated under the auspices of the American Arbitration Association. The trial court issued that order and Academy sought both appellate and mandamus relief from the trial court’s order.

The 1st District’s Analysis:

No Appellate Jurisdiction

Initially, the court of appeals noted that appellate jurisdiction did not exist. The court stated that appellate jurisdiction would only exist under either the Federal Arbitration Act or Texas Arbitration Act if there was an order denying a motion to compel arbitration. Tex. Civ. Prac & Rem. Code Ann. §§ 51.016 & 171.098.

Here, there was no order denying a motion to compel arbitration. Rather, there was an order clarifying that arbitration did not have to be conducted under the umbrella of the American Arbitration Association. Because of this, there was no appellate court jurisdiction of the interlocutory appeal.

Mandamus Jurisdiction

The court of appeals, however, did note that it had jurisdiction to consider a writ of mandamus. The court of appeals stated that, in certain limited circumstance, courts assume the parties intended courts to decide matters such as the validity or scope of an arbitration agreement. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002); AT&T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 649 (1986); John Wiley & Sons, Inc. v. Livingston 376 U.S. 543, 546-47 (1964).

Here, the court noted that the question of whether the parties agreed to administration of the case by the American Arbitration Association did not concern the validity or scope of the arbitration agreement and did not belong to the court, but instead belonged to the arbitrator. Howsam, 537 U.S. at 83; In re D. Wilson Constr. Co., 196 S.W.3d 774,780-81 (Tex. 2006). The court of appeals then held that the trial court erred in straying past its gateway function and conditionally granted the writ of mandamus.

What to Take Away:

Unless a trial court denies your ability to go to arbitration, you cannot make an interlocutory appeal of a decision limiting the administration of arbitration. Furthermore, if a trial court does more than determine that an arbitration agreement is valid or invalid, or a dispute falls within or outside the arbitration agreement, the trial court has gone beyond its limited gatekeeper function for arbitration.

The Case:

Academy, Ltd. et al v. Miller, 2013 Tex. App. LEXIS 1690 (Tex. App.-Houston [1st] Dist. Feb. 21, 2013, no pet. h.)


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